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CEOs gauge ‘disconnect’ with government

Editor’s note: This commentary appeared in the 12/6/13 edition of Center Maryland.

By Donald C. Fry

The “disconnect” between corporate leaders and policy-makers in Washington, D.C. is “as sharp as ever,” reported The Wall Street Journal after last month’s annual conference of the newspaper’s CEO Council of more than 100 corporate leaders from across the nation.

That conclusion and the overall Top Five priorities developed at the Wall Street Journal’s two-day CEO conference will sound very familiar to Maryland business leaders.

Of the top five overall priorities developed at the Journal’s conference, three – education reform, tax reform and business-government cooperation, Priorities 2, 3 and 4 respectively – are virtually the same as priorities developed by Maryland business and civic leaders at last June’s Chesapeake Conference of CEOs conducted by the Greater Baltimore Committee to address our state’s competitiveness challenges.

As was the case for Maryland’s business leaders, the issue of competitiveness was top of mind for the 136 members of the Journal CEO Council who attended the newspaper’s conference, including one from Maryland, Gary B. Smith, president and CEO of Ciena Corporation, headquartered in Hanover, Md.

William E. “Brit” Kirwan, chancellor of the University System of Maryland, also attended the conference as a participating guest.

The top four overall priorities from the Journal’s CEO conference emanated from the “Staying Competitive” work group. The fifth was developed by the “Health Care Innovation” work group. But the issue of competitiveness and collaboration surfaced prominently in the discussions of the three other work groups where national CEOs debated issues related to “The Future of Capitalism,” “How Best to Tackle Cyber Security,” and “The U.S. Energy Bonanza.”

Here are summaries of what participants in the Journal’s CEO conference had to say about their priorities:

1. Immigration reform. Our nation needs immigration reform to retain talented foreign workers educated in the U.S., to attract talent to the U.S., and to “allow a freer flow of people into and out of the U.S.,” according to the Journal. “Immigration policy should mirror labor needs.”

2. Education reform. The U.S. “needs to invest in education to train employable workers, starting at the K-12 level, with a focus on and respect for multiple pathways,” which should include “vocational training, apprenticeships, and community college – not just four year university degrees,” cites the Journal. “Businesses should actively engage in the education process, particularly at state levels, through youth apprenticeships, technical training, STEM and continuing education.”

3. Tax reform. The nation’s tax code needs to be overhauled, the Journal conference participants said. “The current system hurts U.S. competitiveness and encourages businesses to move abroad. Close loopholes and simplify the system.”

4. Business-government cooperation. “Business and government should build better bridges to each other – rather than viewing each other as adversaries – to advocate for free enterprise and shared prosperity.” Journal conference participant also urged that experienced business people serve at top levels of government.

5. Focus on health care quality. Government and industry should seek “better health care outcomes, safety and service and aim to reduce error and harm,” the Journal CEO Council urged. “Government and industry should eliminate waste – estimated at $765 billion annually – including unnecessary services and administrative inefficiencies.” Journal conference participants also called for a national data network to create health care transparency for consumers and payers.

For Maryland’s business leaders, the need for tax structure reform and for strengthening education resonates strongly at the state level as well. Participants in the GBC’s Chesapeake Conference assigned a top priority to making Maryland more competitive for business growth by restructuring state taxes in a strategic, but revenue-neutral way and examining the state’s spending processes.

Meanwhile, two of the eight other priorities Maryland business leaders articulated in the Chesapeake Conference report, “A Compact for Competitiveness,” related to education and workforce development. Maryland needs to deploy a coordinated strategy between the state’s K-12 system and higher education to strengthen our workforce in terms of science, technology, engineering and math (STEM). The state also needs to incorporate constructive, outcome-driven accountability into the K-12 public education process, the GBC report recommends.

For its part, the business sector needs to be an active partner in the education process, including aggressive development of internships, apprenticeships, collaboration with community colleges and other ways to prepare young people for today’s tech-driven work environment, said participants at the GBC’s Chesapeake Conference.

Other priority issues for Maryland business leaders that surfaced prominently in discussion groups at the Journal’s CEO conference included infrastructure development and regulatory consistency.

But for me, it’s especially noteworthy that the overarching strategic priority developed by Maryland business and civic leaders at the GBC’s Chesapeake Conference – cooperation between business and government – also made the Top Five priority list at the Wall Street Journal’s CEO conference.

GBC conference participants called for a “Compact for Competitiveness,” a shared set of strategic priorities for economic growth and job creation embraced by leaders of both business and government in Maryland.

The need for collaboration and alignment of public and private sector interests to close the “disconnect” between business and government was clearly a recurring theme among national business leaders as well.

“In the business world, companies are growing again. Earnings are up, so too employment. But what the chief executives want, before they flip the switch on more business investment, is policy clarity,” the Wall Street Journal reported. “The urgent need to find political compromise seemed to hang over the two-day conference.”

Business-government teamwork is frequently touted as an aspirational goal but, up until now, it has not garnered serious strategic attention.

Why is this so important? Because the degree to which government policy makers and business leaders are on the same page profoundly affects – either positively or negatively – the decision-making processes in Washington and Annapolis and the policy framework that ultimately defines the private-sector’s capacity for the economic growth.

As CEO participants in one Journal conference discussion group collectively put it: “Businesses and government need to work to better align themselves to common purposes. Business and government cannot be antagonists; they need to be partners.”

Maryland business leaders couldn’t agree more. That’s why the lead core pillar for business growth and job creation in the GBC’s 2010 report, “Gaining the Competitive Edge” states that government leadership must unite with business “as a partner, not an adversary.”

We must all keep in mind that it is private-sector economic growth that drives the fiscal bottom lines for government as well as business.

Donald C. Fry is president and CEO of the Greater Baltimore Committee. He is a regular contributor to Center Maryland.